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Nov. 17 — Removing undocumented workers from the construction industry would ultimately decrease
industry GDP by about 8 percent, a research group estimates.

If the construction industry excluded undocumented workers, it would face a short-run
drop in its gross domestic product of $30.9 billion (about 5 percent) and a long-run
decrease of $47.6 billion from the industry’s GDP in 2013 of $619.87 billion, according
to a
working paper released Nov. 14 by the National Bureau of Economic Research, a nonpartisan group
that distributes research findings among academics, public policy makers and business
professionals.

If undocumented workers gained legal status it would cause a short-run increase in
the construction industry’s GDP of 1.2 percent ($7.7 billion annually) and a long-run
increase of 1.9 percent ($12.1 billion annually), the report calculated.

Wholescale legalization and mass deportation are both “extreme scenarios” that are
unlikely to occur in the foreseeable future, Randy Capps, director of research for
U.S. programs at the Migration Policy Institute, told Bloomberg BNA Nov. 16. The Migration
Policy Institute is a think tank that says it favors “fair, smart, transparent, and
rights-based immigration and refugee policies.”

The report goes a “little bit further than some of the past research” and importantly
focuses on industry-specific productivity effects of immigration policy, Capps said.

But the notions either that legalizing undocumented workers would give industry GDP
a major boost or that removing them would cause a major productivity decrease deserve
skepticism, Ira Mehlman, a spokesman for the Federation for American Immigration Reform,
which advocates for lower immigration levels, told Bloomberg BNA Nov. 15.

Immigration Observers Differ on Findings

The report’s researchers, economics professors Ryan Edwards and Francesc Ortega at
Queens College in New York, said their distinction between short- and long-run effects
is whether the capital stock is assumed to remain fixed or adjusts over time following
workforce changes.

With respect to a homebuilder, for instance, an immediate loss of labor power would
translate into a short-term reduction in the number of houses the company can build,
Capps said.

“But over the longer term, you’re going to have to pay workers more,” he said. “That’s
going to make your houses more expensive to build, and that’s going to affect the
planning of how many you can afford to build, and that’s going to mean some construction
firms leave the industry. That’s where capital adjustment comes into play.”

The report’s findings linked to the theoretical removal of undocumented workers should
be taken with a grain of salt, Mehlman said. He downplayed the report’s estimated
hit to construction industry GDP caused by undocumented workers’ removal.

“You have millions of people here who are unemployed or marginally employed,” Mehlman
said. “There’s no reason to believe that they wouldn’t fill whatever vacuum is left
by enforcing laws against illegal aliens.”

Meanwhile, the legalization of undocumented workers would provide a “better matching
of workers with their skills” and unlock higher paying jobs and construction trade
certification opportunities for some workers, Capp said.

On the other hand, many workers would use their newfound labor market mobility to
leave behind physically demanding jobs with low pay, Mehlman said. He pointed to the
1986 enactment of the Immigration Reform and Control Act, which made more than 1 million
undocumented seasonal agricultural workers eligible for legal status. Many of those
workers left the agricultural sector, he said.

Report Gauges Undocumented Share of Workforce

There were about 1.1 million undocumented workers in the construction industry for
the 2011-2013 period, making up a 13 percent share of the industry workforce, Edwards
and Ortega found.

Most of the paper’s analysis stems from data for the years 2011-2013 from the Census
Bureau’s American Community Survey as processed by the Center for Migration Studies.

The researchers’ methodology took into account the skill distribution of undocumented
workers, their relative productivity and their substitutability in terms of both native
and documented foreign-born workers, the report said.

To contact the reporter on this story: Elliott T. Dube in Washington at
edube@bna.com

To contact the editor responsible for this story:
Jo-el J. Meyer at
jmeyer@bna.com

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